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Alibaba, Tencent fuel digital ad market

News, 22 September 2016

SHANGHAI: Alibaba now holds the largest share of China's digital ad market, as projections indicate that the company and rival Tencent will enjoy huge increases in digital ad revenue in the coming year from display ads and mobile.

New data from eMarketer reveal that China will draw more than a fifth of all digital ad spending globally, totaling $41.7bn, as the market continues to strengthen.

Chinese consumers are less hostile toward display advertising and it remains a solid investment in the country. Mobile also offers huge opportunities.

Alibaba is set to overtake previous market leader, Baidu, in digital ad revenues as the Chinese e-commerce giant continues to see extraordinary growth: its digital ad revenue stream is now more than $12bn, on the back of increased revenue from display ads.

Although Baidu held 28% of the total market on previous projections compared to Alibaba's 24.8%, a tough year for Baidu has seen its projection flatten out to just 0.3% growth, compared to Alibaba's massive revenue growth of 54%.

Likewise, arch-rival Tencent – owner of the dominant WeChat platform – is set to boost its digital ad revenue by more than two thirds (68%). Though its digital ad revenue is a comparatively low $4.1bn presently, eMarketer projects the company will be catching up to Baidu by 2018 with $11bn in digital ad revenue.

Mobile ad spend is also booming in the country, as marketers look to target smartphone users, with payoff set to soar in the next two years. Again, Alibaba leads with mobile ad revenues of $11.1bn – a number anticipated to reach almost $20bn by 2018. Tencent is forecast to overtake Baidu in the same year with revenues of $9bn from mobile ad spend.

Warc's latest International Ad Forecast, released last month, anticipates a 22.6% rise in Chinese internet adspend this year. Further growth, of 16.6%, is forecast for 2017, by when the market should be worth RMB239.4bn (US$35.5bn).

Data sourced from eMarketer; additional content by Warc staff